Jian Yu Qiang v. Li Shi Liang and Others

HCA000459/2003

HCA 459/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 459 OF 2003

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Coram: Deputy High Court Judge A Cheung in Chambers

Date of Hearing: 16 May 2003

Date of Judgment: 16 May 2003

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J U D G M E N T

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1.I have before me two summonses. The first summons is an application by the Plaintiff to restrain the 1st Defendant from dealing with or disposing of 9,000 shares, the subject matter of the Plaintiff's claim, pending the trial of the action. It is the Plaintiff's case that the 1st Defendant holds the shares in question in trust for the Plaintiff himself. On the other hand, it is the case of the 1st Defendant that in fact he holds the shares in trust for the Guangdong Provincial Branch of the Bank of China.

2.The second summons, also taken out by the Plaintiff, is a holding summons. The Plaintiff asks the court to grant an injunction restraining the 1st Defendant from dealing with or disposing of the shares pending the disposal of his first summons. Obviously, the second summons is designed to preserve the status quo pending the disposal of the substantive application. Neither party asks me to deal with the substantive application today. Mr Ling, appearing for the 1st Defendant, told me at the outset that he has burned the mid-night oil and has prepared on behalf of his client a draft affirmation in opposition to the substantive application. Obviously, the Plaintiff would need time to consider it.

3.I am not going to deal with the substantive application today, but I need to deal with the second summons in those circumstances. I proceed on the basis that the Plaintiff has an arguable application. I would put it no higher than that, but equally I would not say at this stage, notwithstanding the very succinct and able argument of Mr Ling, that because of delay, lack of urgency and so forth, the Plaintiff's substantive application is totally unarguable.

4.Proceeding from such a premise, one thing that is of concern is the happening of anything to the shares in the meantime pending the outcome of the substantive application. As to that, all that I am concerned with is the risk in question, as well as the potential prejudice to the parties if something of that sort does happen. So far as the risk is concerned, having heard the parties, I would say that the risk is there although it is not really high, given that the shares have been held by the 1st Defendant since 1994 and thus far apparently the 1st Defendant is still holding the shares. But that is not the only consideration; in my judgment, I need to take into account the potential prejudice to the parties or what is often termed the balance of convenience.

5.It is plain that if the shares were disposed of pending the outcome of the substantive application in the absence of a holding injunction, the whole application of the Plaintiff would be defeated. On the other hand, I can really see little prejudice to the 1st Defendant if the holding injunction is granted subject to one thing, i.e. that if in the meantime, the 1st Defendant as bare trustee or nominee receives instructions from the alleged beneficiary i.e. the Bank of China in Guangdong regarding disposal of the shares and it is prevented by a holding injunction from doing so, that would be a prejudice. But the prejudice can be overcome by suitably amending the wording of the holding injunction that is being asked for.

6.Further I note that the alleged beneficiary, i.e. the Bank of China, is not the Bank of China in Hong Kong but the Guangdong Branch in the Mainland. In the absence of any evidence that whatever is done or not done by the Guangdong Branch can be regarded as the responsibility of the Bank of China in Hong Kong, I do see the difficulty faced by the Plaintiff, in that even if the Plaintiff were to write to the Bank of China in Guangdong to assert his title to the shares, and if that was ignored, the Plaintiff would possibly have difficulty in taking the matter further in the Mainland.

7.Furthermore, by the nature of the Plaintiff's case, if he is right, the 1st Defendant is simply making up a story of a trust in favour of the Bank of China and in that case there is no guarantee that writing to the Bank of China would fully protect the interest of the Plaintiff against any unauthorized disposal in the meantime.

8.So balancing all these factors, I am minded to grant a holding injunction despite my initial reaction against the Plaintiff's application for such an injunction. But as I say, in order to protect the 1st Defendant and also the Bank of China's position relating to the shares as per the 1st Defendant's pleaded case, the holding injunction that I am granting is subject to the 1st Defendant or the Bank of China's application to discharge the holding injunction.

9.I need not qualify this liberty to apply to discharge. Of course if no change of circumstances can be shown by the 1st Defendant, it will be an abuse of the process of the court for the 1st Defendant to seek to relitigate this matter again by making an application to discharge. On the other hand, if the application comes from the Bank of China, I must assume that that application is supported by reasonably arguable grounds.

10.So subject to such a rider, I would grant the holding injunction. In other words, I order that the 1st Defendant be restrained pending the disposal of the summons issued by the Plaintiff on 13 May 2003 whether by himself or by his servants, agents or otherwise, howsoever from disposing of or mortgaging, assigning, charging or otherwise dealing with (including selling and pledging) the 9,000 shares in the 2nd Defendant that are referred to in the Statement of Claim and registered in the name of the 1st Defendant, with liberty to the 1st Defendant and/or the Guangdong Provincial Branch of the Bank of China to apply on notice to the Plaintiff to discharge or vary the injunction.

[Submission on Costs]

11.Having heard the parties further on costs, I order that the costs be reserved.

Representation:

Mr William Leung, of Messrs William K W Leung & Co., for the Plaintiff

Mr C W Ling, instructed by Messrs Robert C C Ip & Co., for the 1st Defendant